The determinants of inbound tourism demand in Malaysia: another visit with non-stationary panel data approach

Abstract

The purpose of this study is to estimate an inbound tourism demand model for Malaysia by incorporating new control variables – environmental pollution and crime rate. We found that tourism demand is sensitive to income, price of tourism in Malaysia, price of alternative tourism destinations, pollution, and to the crime rate in Malaysia. We also found that the September 2001 terrorist attack incident and the health epidemic diseases, such as the severe acute respiratory syndrome and avian flu, had a negative impact on tourism demand in Malaysia. Thus, apart from economic factors, tourists’ decisions of where to go are also dependent on environmental quality, security, and health factors.

Keywords:

• Crime
• Malaysia
• pollution
• tourism demand

Acknowledgement

We would like to thank the three anonymous reviewers for their critics and suggestions that helped to significantly improve on the earlier draft of this paper. We thank Haiyan Song and Stefano Fachin for sharing knowledge and GAUSS programming codes that enabled us to strengthen the analysis. Any flaws that remain in this paper are of our own responsibility.

Disclosure statement

No potential conflict of interest was reported by the authors.

Funding

The first author would like to acknowledge the Universiti Sains Malaysia Short-Term Research [grant number 304/CDASAR/6313179].